Chip shortages push hyperscalers to build their own

Meta, parent company of Facebook and Instagram, also now is in the AI-focused processor game. The company recently unveiled the next generation of custom-made chips to help power AI-driven rankings and recommendation ads on social media platforms.

Microsoft lags behind but makes significant investment

Microsoft’s move into the microprocessor space is perhaps the most telling sign of the shift, Valle told Network World. The company lagged behind its competitors in making the shift but has since unveiled a processor strategy to match its genAI investment, Valle said.

Indeed, Microsoft is highly invested in genAI, having made its Copilot chatbot a cornerstone of its strategy and then integrating it in all of its main applications, she noted.

The Azure Maia 100 and Cobalt 100 chips – the first two custom silicon chips designed by Microsoft for its cloud infrastructure – are especially designed for AI workloads, she said. Microsoft plans to use the Cobalt 100 ARM server CPU for general purpose tasks, and the Maia 100 AI accelerator for Azure data centers to support services, including OpenAI and Copilot.

“For Microsoft to take this step, it means that the company is investing a lot of money in innovation to drive its ambitious AI plans,” Valle noted.

Changes ahead in the chip landscape

Overall, the investments by the four companies “are evidence that the market is extremely competitive and that hyperscalers are actively investing in new architectures to drive their ambitious AI plans,” Valle said. As it’s early in the game, there is still time for each of them to “establish an early competitive advantage,” she added.